Macquarie Group to battle KKR for Westpac wealth unit

In February, Macquarie reported a strong quarterly performance supported by an increase in financial market-related divisions, as analysts expect its profit for the year to March to sail over the $4bn mark. Picture: AAP

Banking powerhouse Macquarie Group is believed to be lining up in the auction to contest Kohlberg Kravis Roberts for Westpac’s $1bn-plus wealth management unit.

Promotional material for the sale being handled by Morgan Stanley is believed to be out this week.

New York-based private equity firm KKR was always expected to fight hard for the business through Colonial First State, which it owns in conjunction with Commonwealth Bank, but it will be interesting to see how Macquarie views the opportunity.

KKR agreed to buy 55 per cent of CFS from CBA in May 2020 for $1.7bn and is the competition favourite.

Both KKR and Macquarie have looked at Australian financial services businesses in the past both together and separately.

In the past, they joined forces to consider a deal to buy AMP, which consists of a bank, a wealth management unit and a funds management arm recently renamed Collimate Capital.

Some market experts believe it will be serious at a price, but it will also be coming up against other buyout funds.

 

Macquarie has a large platform that provides clients with cash management services, investment and superannuation products, financial advice, private banking and stockbroking. Its wrap business reportedly has more than $100bn of funds under administration.

Westpac Panorama’s BT Panorama wrap platform offers access to a range of tradeable securities and investment wrappers and is expected to be worth between 17 and 19 times its earnings before interest and tax.

In November, Westpac said it had more than 230,000 customers with about $105bn of funds under administration on the Panorama platform.

It has been generating up to $100m of gross profit.

Wealth management platforms require major spending on technology and any new buyer of BT Panorama will probably need to invest further in the technology of the business, experts say.

In February, Macquarie reported a strong quarterly performance supported by an increase in financial market-related divisions, as analysts expect its profit for the year to March to sail over the $4bn mark.

Its assets under management reached $750.1bn at December, up 2 per cent from the three months earlier.

For the six months to September, it posted a $2.04bn profit, which was double the amount it generated in the previous corresponding period.

BT Panorama describes itself on its website as having the highest number of adviser relationships in the market and manages investment portfolios, self-managed super funds, superannuation and insurance.

The platform was set to be sold last year but the process faced delays while KKR awaited approval to buy into CFS.